Partners for Development

Improved market systems making markets work for the poor is one of several agricultural sectors where Public-Private Partnership can contribute. (Photo: T.S. Knudsen)

Decades of substantial international efforts have contributed to significant development in large parts of the South, albeit less so in Africa. Still, even in Asia and Latin America, public investments have failed to eradicate poverty and forge sustainable development. The task is immense and it calls for private sector partnership.

Furthering economic and social development in the South has for decades been a process led by the public sector; by governments and governmental agencies. Developing a vibrant private sector has been part of the ambition. Foreign private sector companies have been part of the development efforts, but mainly as contractors, less as partners; more as suppliers of goods than contributors of competence. Now, this is changing: The role of the private sector is acknowledged as crucial in any integrated strategy for sustainable development. Consequently, private companies - with their tangible and intangible assets - are invited to joint the development process as partners - wholly integrated with public sector actors and NGOs.

Public-Private Partnership as a Model
Public-Private Partnership (PPP; also know as P3) as model matured in the 1990s. Initially a tool for realizing large development projects in the North, it was then adopted as a model for joint development efforts in the South. Basically, it involves public bodies entering business ventures with private companies (often constituting a consortium) to fund and develop projects traditionally considered part of the public realm. PPP has been applied to a considerable number of large development projects in the North, not least within utilities and transportation.

The PPP Knowledge Centre of the Dutch Ministry of Finance defines the PPP as "a form of collaboration in which the government and the private sector, each retaining its own identity and responsibilities, join forces to carry out a project on the basis of a predetermined sharing of tasks and risks. The result of the collaboration is added value: a qualitatively better product for the same money, or the same quality for less money, or both. There are benefits for both sides: for the private sector there are not only new opportunities in a growing market, it can make its own contribution to a project that is also attractive from the commercial angle; to the government, the benefit is the prospect of enhanced quality and/or reduced project costs." The goal of a PPP, according to the Centre, "is to create added value and efficiency gains, and it is a goal that can be achieved if both sides - government and private sector - do what they are best at. The result is a win-win situation."

Public-Private Partnership in Development
PPP as a model and method in economic and social development in the South, gained an increasingly prominent role in the early 21st century, not least in connection with the UN Millennium Development Goals. It is realized, that in order to achieve these, as well as to bring about sustainable development in poor countries, the private sector must be encouraged to play a major role - alongside the public sector, multinational development agencies and non-governmental organizations.

With respect to PPP in development processes in the South, USAID defines it an important tool for "delivering greater development impact through the combined strengths of multiple stakeholders".

PPP is an integral part of the Millennium Project, and partnerships play a central role in the Project's report ("Investing in Development") to the Secretary General prior to the World Summit in 2005. It devotes a full chapter to contributions from the private sector, referring to the UNDP Commission on the Private Sector and Development, which presented its report ("Unleashing Entrepreneurship") in 2004, and the Monterrey Consensus of 2002. Any national strategy to achieve the MDGs, states the MP report, "needs to include a clear framework for private sector growth", because private companies contribute to poverty reduction through many channels. Such growth, however, is unlikely without the direct participation of foreign companies or multinational corporations; be it manufacturing or financial enterprises, or others. "A public-private partnership," states the report, "can combine the respective strength of the private and public sectors". Likewise, the Hunger Task Force of the Millennium Project advocates the forging of global partnerships in order to reach the MDGs.

The World Economic Forum makes a strong point in its report, "Harnessing Private Sector Capabilities to Meet Public Needs"  - that corporations should focus on applying their core business competence to help halve hunger. Their business involvement and core competence is in the long run of much greater value than philanthropic donations - contributing to the development of jobs and products, local skills and structures, to sustainable development. According to the report, "Collaborative private sector efforts to reduce hunger are rare, but have tremendous potential to bring both practical solutions and political action to hungry communities". With respect to halving hunger, the report points to the need for increased food production and strengthening of market systems, where increasing farmers´ access to new and existing products and technologies is one opportunity. USAID equally points out the value of applying core competence: "Companies that commit to social responsibility via what they already do as a business can be a powerful force."

The World Bank also considers private sector involvement a vital factor in achieving the MDGs, stating "We have reached a point where it is time to partner with businesses large and small". During an electronic conference for business leaders hosted by the World Bank Institute in 2005, it was suggested that sector-specific strategies be created and led by representatives from the private sectors. In addition to specific areas such as food, energy and communications, the private sector also has an important role to play in promoting good governance and tackling corruption; necessitating adherence to strict corporate citizenship by business itself.

Private business is identified as a key player in combating poverty - and the private sector wants to contribute: Nine of ten CEOs surveyed by the World Economic Forum's Global Corporate Citizenship Initiative, in 2004, felt that partnerships between business, government and civil society must play either a major role or some role in addressing key world development challenges.

External resources